A clutch of tier one data  will enable traders to take a view on the path of US rate cuts for the remainder of the year. The US dollar remains a key outperformer of the major currencies and we consider the impact across forex, equities and commodities. We also look into key Brexit developments.

1. Weekly Outlook
Monday 30th September 2019 by Richard Perry, Market Analyst
Forex and CFDs are high risk leveraged products that can result in losses greater than your initial deposit and you should
therefore only speculate with money you can afford to lose. FX and CFD trading are not suitable for everyone. Please
ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such
transactions. You should first carefully consider your investment objectives, level of experience, and risk appetite and only
invest funds you are prepared to lose entirely. For our full risk warning, please go to the end of this report.
Key Economic Events
WHEN: Friday 4th October, 1330BST
LAST: 130,000 / +3.2%
FORECAST: 145,000 / +3.2%
Impact: Focus remains on the trade dispute, but with
FOMC dots suggesting a pause and Fed Funds futures in
the balance for another cut this year, how tier one US
data performs will also be a key gauge. Any sign of a
significant downturn in fortunes for the US consumer
and/or deterioration in the labor market will be considered
dovish. Inflation is gravitating up towards the 2% target
but average hourly earnings need to hang in above 3% in
the payrolls report. Headline jobs growth is moderating
towards a late cycle average c. 150,000. Disappointments
would hit yields and drive risk aversion.
Date Time Country Indicator Consensus Last
Tue 1st Oct 0530BST Australia RBA monetary policy -25bps CUT to +0.75% 1.00%
Tue 1st Oct 0900BST Eurozone Manufacturing PMI (final) 45.6 45.6
Tue 1st Oct 0930BST UK Manufacturing PMI 47.0 47.4
Tue 1st Oct 1500BST US ISM Manufacturing 50.1 49.1
Wed 2nd Oct 1315BST US ADP Employment change 140,000 195,000
Thu 3rd Oct 0900BST Eurozone Services PMI / Composite PMI 52.0 / 50.4 52.0 / 50.4
Thu 3rd Oct 0930BST UK Services PMI 50.3 50.6
Thu 3rd Oct 1500BST US ISM Non-Manufacturing 55.0 56.4
Thu 3rd Oct 1500BST US Factory Orders (MoM) -0.3% +1.4%
Fri 4th Oct 1330BST US Non-farm Payrolls / Average Hourly Earnings 145,000 / +3.2% 130,000 / +3.2%
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1N.B. Reuters data where possible. Please note all times are now British Summer Time (GMT+1)
Macro Commentary
The US dollar bulls are back in the box seat again as performance edges higher again. The relative performance of
the US economy remains the big standout of the major economies. The rate cut expectations for the remainder of
2019 are increasingly in the balance and so tier one data will be of major focus this week. If the US ISM data will be
a good gauge for comparatives whilst the Non-farm Payrolls report will be poured over to see whether the decent
real wage growth (now 1%/1.5%) remains supportive of the positive consumer sentiment environment. The US
economy is expected to be growing at around 1.5% to 2.0% in Q3 against a Eurozone economy which is struggling
with stagnation. However, traders will also be keeping a close eye on newsflow surrounding the US/China trade
dispute. The next round of talks is on 10th/11th October and markets appear to be taking Trump’s assertion that a
deal could be “sooner than you expect” with a pinch of salt. So Broadly we see the US dollar, which is not an
outfight safe haven (of the ilk of the Yen or Swissy), moving into a bit of a sweetspot recently. Counterintuitively,
right now, Treasury yields falling is deemed to be dollar positive. Yields falling and renewed dollar outperformance
will also make it difficult for equities to perform well too. Wall Street pulled higher throughout early September as
yields increased and the dollar fell. However, as yields have turned lower and the dollar higher, Wall Street has
struggled to sustain the bull traction. The tier one data, reaction on Treasury yields and the dollar are key this week.
Must Watch for: Non-farm Payrolls & Average Hourly Earnings
US Inflation gauges
US core PCE picked up in August and the focus will be on whether
average hourly earnings continue to hold above 3%. This would
help support consumer sentiment indicators and retail sales.

2. Weekly Outlook
Monday 30th September 2019 by Richard Perry, Market Analyst
Foreign Exchange
Throughout September, as the UK Parliament ratified the “Benn Act”, the perception for the market is that risk
of a “no deal” Brexit on 31st October had receded. This was driving a consistent run of positive sterling
performance. However, as we move towards October it seems that this may not be as safe an assumption as it
seems. PM Johnson vowed to pull the UK out of the EU “do or die” and loopholes in the Benn Act could mean a
way around its very purpose (to legally enforce Johnson to request another 3 month delay). Can Parliament
move to amend the Benn Act to close off any prospective loopholes? For now GBP is under pressure again.
The underperformance of GBP could now be exacerbated by Bank of England hawk Michael Saunders who
has talked up the prospects of BoE rate cuts on the dragging uncertainties of Brexit (i.e. even before Brexit with
or without a deal). Saunders’ consideration is though linked to the prospect of continued global slowdown.
Performance of the Euro is not much better as data continues to point towards stagnation at best, perhaps even
contraction. Technical recession in Germany (c. 30% of Eurozone GDP) could come in Q3 and the fear is that
the slide in manufacturing infects into the services sector. Friday’s Eurozone Economic Sentiment Index
showed services sentiment holding up well (albeit marginally). As long as US data continues to hold up
(especially on the consumer side), and inflation ticks back towards the Fed’s 2% target, there is little pressure
on the Fed to push ahead too aggressively with easing. USD performance will remain relatively strong.
WATCH FOR: UK Parliament amending the Benn Act? Global PMIs, Non farm Payrolls
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FX Outlook
GBP/USD
Watch for: Performance is turning negative
once more for sterling
Outlook: After a strong recovery early in
September, the bulls have rather deserted
sterling in the past week. This is really acting to
drag on technical indicators which are turning
corrective. The key for Cable in the coming days
will be support around $1.2280 as a consistent
breach this week would bring the market below
all moving averages and a confirmed breach of a
higher low. A new downtrend is certainly
threatening and the bulls need to pull the market
decisively back above a pivot at $1.2380 to
improve the momentum and outlook again.
Below $1.2230 puts the sellers in control.
EUR/USD
Watch for: The medium term outlook remains
negative as the trend channel pulls ever lower
Outlook: The downtrend channel remains the
driving force of the negative medium term
outlook on EUR/USD. Lower highs and lower
lows are pulling the market to the lowest level
since May 2017, with the next support area at
$1.0850. Old supports are new resistance, with
$1.1100 and now $1.1025 being growing levels
of resistance. Momentum is negatively
configured and suggests that rallies remain a
chance to sell. A sell-zone between
$1.0965/$1.1025 would be an ideal entry point
for the bears this week.

3. Weekly Outlook
Monday 30th September 2019 by Richard Perry, Market Analyst
Equity Markets
Over the course of the past month, the prospects of Wall Street markets have been closely tied to the direction of
Treasury yields. Risk positivity in early September pulled yields higher and the S&P 500 rallied decisively.
However, in the past couple of weeks there has been a reduction in risk appetite again which has pulled yields
back lower, with the Wall Street rally subsequently rolling over. So, the direction of yields and equities are
positively correlated once more. On a 21 day basis, the correlation between the S&P 500 and the US 10year
Treasury yield is running at +0.9 and has been strongly positive for the past two months. So watch out for yields
direction from the key tier one data points throughout this week, with the ISM data and Non-farm Payrolls top of
the agenda. Furthermore, we need to look out for how the impeachment story proceeds. If there are legs in the
whistleblower and Democrats pursuing the President, it could weigh on yields and subsequently drag on Wall
Street. In Europe, there is a link between equities and currency moves, chief amongst which is a negative
correlation between FTSE 100 and GBP. This is something that we have focused on for several months, but the
negative correlation (weak sterling is positive for FTSE 100) is a key factor in driving relative outperformance of
UK large cap equities. FTSE 100 has been driven to eight week highs and the pivot at 7370 is now a key basis of
support. The relative performance of an export heavy DAX is still linked to the prospects of the trade dispute.
Latterly improved, but key resistance remains at 12,495.
WATCH FOR: Trade dispute developments, Brexit developments, PMIs and payrolls
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DAX Xetra
Watch for: A rebound has helped maintain bull
control, but resistance lies significant overhead.
Outlook: A corrective move was quickly retraced
last week, to keep the bulls broadly in the box
seat. However, there are considerable question
marks over how sustainable a run higher could
be. There is significant resistance from the
September rally at 12,495 under the mid-
summer 12,600/12,656 highs. Trading above the
moving averages keeps a positive bias, but
momentum looks more questionable now as
MACD and RSI have faltered. A move to test
12,495 is needed to build the momentum again
this week, otherwise the market could begin to
range on an ongoing basis.
FTSE 100
Watch for: The breakout above a pivot at 7370
drives an improving outlook.
Outlook: The FTSE bulls have taken heart from
the renewed weakness on sterling (negative
correlation continues) driving the market through
a medium to longer term pivot at 7370. This has
been a key turning level for the market since
March and now means that the bulls are well
positioned. Momentum indicators are moving
into strong configuration with the breakout., with
MACD lines rising off a “bull kiss” and RSI at two
month highs above 60. All suggests that
weakness is a chance to buy FTSE this week,
with 7370 as a key gauge of support. Above
resistance at 7460 opens the key 7727 high
again.
Index Outlook

4. Weekly Outlook
Monday 30th September 2019 by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
The bull run on gold has stumbled in recent weeks, turning into a multi-week $75 consolidation range. However,
as the dollar strengthens and traders look towards the latest round of US/China trade negotiations with a
degree of hope, gold is being dragged lower. This has broken a four month uptrend and also seen momentum
indicators turn increasingly corrective. The bulls are under growing pressure and a confirmed move below
$1481 would complete a top that would signify a change in trend.
The supply risk premium on oil driven by the attacks on the Saudi oil refineries has been unwound now with
the prospects of Saudi supplies being back up and running again. This turns the focus back on the demand
outlook. The April to August sell-off came amid concern over the global slowdown and given the recent flash
PMI data (especially for the Eurozone) the prospects for the global outlook still look negative. This will continue
to keep a lid on any recovery prospects for oil.
Bond yields have rolled over in the past couple of weeks, but are there signs of stabilisation? Watch for the tier
one data points this week to be a key influence on yields, whilst how bond markets react to newsflow on the
prospect of the US/China trade deal will also be telling. Donald Trump suggesting that a deal could be “closer
than you think” has not been enough to change the renewed downtrend, but something more concrete might.
WATCH FOR: Trade dispute developments, PMIs, Non-farm Payrolls
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4
Gold
Watch for: Can the gold bulls prevent a multi-
week top forming?
Outlook: The consolidation is making for
increasingly nervous gold bulls. The four month
uptrend is broken, whilst momentum indicators
are now neutral at best. There is a growing fear
that this consolidation could turn into a seven
week “head and shoulders top”. The key support
preventing this comes in at $1481. However, a
closing breach of $1481 this week would mean a
lower high at $1535 and a lower low (under
$1481). In other words, the definition of a trend
reversal. At least it would mean a corrective
move back towards the old June/July
consolidation range $1381/$1453, whilst the
completed top would imply $1405.
Markets Outlook
Brent Crude oil
Watch for: A continuation of the correction, with
a breach of $61.50 opening support c. $58.00
Outlook: Having spent almost every session
since the spike higher in corrective mode, Brent
Crude has now all but unwound the move.
Subsequently with the market in decline for
much of the past couple of weeks, momentum
indicators are turning corrective. A bear cross on
MACD lines, along with Stochastics at multi-
week lows shows a market that is increasingly
being sold into strength. The past few months
has seen a pivot around $61.50 so if the market
begins to close below this support, the a move
back towards the next band of support around
$58.00 could be expected.

5. Weekly Outlook
Monday 30th September 2019 by Richard Perry, Market Analyst
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